Chinese Yuan devaluation led the ground work for a possible global currency war. China has raised fears of international markets by lowering the value of its currency this week, whose consequences would be heavy.
On Monday, China did something it had not done for more than 10 years: lowering the value of the yuan by 7 to US $ 1.
This depreciation of its currency has shaken Wall Street and raised the ire of US President Donald Trump, who immediately accused Beijing of being a currency manipulator.
Info Georges Ugeux, CEO of Galileo Global Advisor said “We realized that the Chinese would play hard”.
For him, this decision of Beijing indicates that China also suffers from the trade dispute with the United States.
Experts do not all agree that it is a deliberate commercial strategy on the part of Beijing, as Washington accuses.
One of the consequences of tariffs is that the target country becomes less competitive in the global market, this is the case of China, whose exports have become less competitive in the United States.
Stephen Gordon, professor in the Department of Economics at Laval University. considers this is a political manoeuvre on the part of the Chinese authorities, he believes that they artificially caused a depreciation that would have occurred naturally if Chinese Yuan had been subject to the free market laws of China.
If we talk about the accusations against the country manipulating its Chinese Yuan, it was more or less true in the early 2000s, and it is even less true now, Gordon said.
Senior vice-president and chief economist for Industrial Alliance Clement Gignac, said that by accusing Beijing of manipulating his motto, the US President Donald Trump has carried the Sino-US conflict to the international level. It will now be the responsibility of the International Monetary Fund (IMF) to investigate these accusations.
Several experts have feared the reaction of the markets after the decline in the value of the Chinese Yuan. But nothing is more uncertain than the current global economic climate, and very few economists can clearly see the future.
The Belgian economist at microphone of Midi Info has accused the United States to stop following the rules of international trade.
“It is not in China’s interest to continue like this. It is not in anyone’s interest to continue this war”, Gordon said, adding that Trump has some funny ideas about how international trade works.